Merck Serono nabs an option on late-stage MS therapeutic vax

Close to two years after Merck KGaA was forced to concede the embarrassing collapse of its oral multiple sclerosis program for cladribine, its Serono unit has picked up a cheap option on the global rights to a little-known therapeutic vaccine for MS controlled by a small public biotech company in Texas.

Opexa Therapeutics ($OPXA) announced this morning that the German Merck agreed to pay $5 million upfront for the option on Tcelna (imilecleucel-T, previously billed as Tovaxin), a Phase IIb treatment for secondary progressive MS. If it picks up the option, Merck will pay an additional $15 million to $25 million--with the higher figure for the right to move directly into Phase III--in a new upfront, tied to $195 million in milestones. For its part, The Woodlands, TX-based Opexa has the right to co-fund development of the drug in exchange for a richer royalty stream.

Just weeks ago Opexa pulled off a 1-for-4 reverse split needed to keep its Nasdaq listing in compliance with minimum pricing rules. The deal gives little Opexa boasting rights to a major league partnership while Merck gains a partner at a minimal cost. Ironically, the German pharma company has had bad luck with therapeutic vaccines as well as MS. It recently announced the Phase III failure of Stimuvax, a cancer therapy in-licensed from Oncothyreon ($ONTY). And the disaster with cladribine was so severe the company had to restructure its operations.

Opexa's shares almost tripled on the news.

"Merck Serono is strongly committed to developing innovative drug candidates like Tcelna (imilecleucel-T), a potential first-in-class personalized cell therapy for patients with multiple sclerosis," said Susan Herbert, head of global business development and strategy at Merck Serono. "This agreement illustrates Merck Serono's commitment to employ creative ways of accessing external innovation to develop potential next generation multiple sclerosis treatments, especially in secondary progressive multiple sclerosis, an area of high unmet need."

"We also are pleased to retain important rights through this transaction, such as certain manufacturing rights, commercialization rights to the Japanese market and a co-funding of development option, as well as rights for all indications outside of MS, all of which are intended to enhance Opexa shareholder value," says Opexa CEO Neil Warma.